2021 (4) TMI 697 - HC - VAT and Sales Tax

Finalisation of deemed assessment - suppression of sales or not - argument of the petitioner's counsel is that the respondent did not conduct any independent enquiry in the matter - violation of principles of natural justice - HELD THAT - In the impugned orders, the petitioner's liability as regards the sales suppression was quantified approximately ₹ 7,00,000/-. Without prejudice to his contention, the petitioner is directed pay the said amount to the respondent on or before 31.03.2021. The petitioner gives an undertaking that he would do so without seeking any extension of time - The said remittance shall abide by the final order to be passed by the respondent following this remand. Of-course, it is seen that the respondent had chosen to infer that there must have been corresponding purchase suppression also. For purchase suppression, on the face of it, there are no materials. The matters are remitted to the file of the respondent to pass orders afresh in accordance with law - Petition allowed by way of remand.

Summary

Issues:
Assessment finalization on deemed assessment basis, surprise inspection leading to impugned orders, lack of independent enquiry by respondent, sales and purchase suppression allegations, settlement under Samathan Scheme, quantification of liability, interference by the court, remand for fresh orders.

Analysis:
The petitioner, an assessee registered with the respondent, had their assessment finalized on a deemed assessment basis for the assessment years 2007-08 & 2008-09. Subsequently, a surprise inspection was conducted at the petitioner's business premises in March 2015 by the Enforcement Wing Officials, leading to the issuance of pre-revision notices and the impugned orders. The petitioner's counsel argued that the respondent did not conduct an independent enquiry and relied solely on the Central Excise Department's proceedings, which was acknowledged by the court. However, the court noted that the respondent's allegations included both sales and purchase suppression by the petitioner.

Regarding the petitioner's participation in the Samathan Scheme during the pendency of an appeal before the Tribunal (CESTAT), the court observed that the petitioner's choice to settle under the scheme indicated issues with their sales transactions. Despite this, the court refrained from conclusively determining the matter solely based on the settlement. The court emphasized that the petitioner's liability for sales suppression was quantified at approximately ?7,00,000 in the impugned orders. The petitioner was directed to pay this amount to the respondent by a specified date without seeking an extension, with the remittance subject to the final order to be passed by the respondent post-remand.

The court found a lack of evidence supporting the allegations of purchase suppression, leading to its interference in the matter. Consequently, the impugned orders were quashed, and the writ petitions were allowed. The case was remitted to the respondent for fresh orders in accordance with the law, leaving all contentions of the petitioner open. However, the court made it clear that the remand order was contingent on the petitioner fulfilling the undertaking to pay ?7,00,000 towards the demand. Failure to comply would result in the automatic recall of the order and dismissal of the writ petitions. No costs were awarded, and connected miscellaneous petitions were closed as a consequence of the judgment.